Gold turns lower after biggest monthly rise in 4 years | Reuters

NEW YORK/LONDON Gold turned lower on Tuesday, as the dollar and global equity markets rose on better-than-expected U.S. data, fuelling speculation the Fed will raise U.S. interest rates.

Palladium surged more than 6 percent on strong U.S. auto sales.

Spot gold XAU= was down 0.2 percent at $1,235.96 an ounce at 3:12 p.m. EST (2012 GMT), after its biggest monthly gain in four years on safe-haven buying spurred by global economic concerns.

U.S. gold futures GCv1 for April delivery settled down 0.3 percent at $1,230.80.

Gold prices were higher earlier, buoyed by weak Chinese manufacturing data and comments by New York Federal Reserve President William Dudley, who said he sees downside risks to his U.S. economic outlook. This could flag a longer pause before the Fed's next interest-rate hike than he and his colleagues had earlier signalled.

"Some U.S. dollar strength (is putting) a headwind into the gold market here, even though you've got a lot of speculation now moving to be long gold and (monthly) exchange-traded product flows rising to the second-highest level since February 2009," said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management in Minneapolis.

The dollar .DXY rallied against a basket of major currencies after U.S. manufacturing appeared to stabilize in February, supporting views of higher U.S. interest rates, a source of pressure for gold prices. [USD/]

U.S. stocks led equity markets around the globe to their highest in a month. [MKTS/GLOB]

Meanwhile, European Central Bank President Mario Draghi said Euro zone growth and inflation prospects have weakened.

Further inflows into gold-backed exchange-traded funds indicated buoyant investor appetite for gold with the largest, New York-listed SPDR Gold Shares (GLD), seeing inflows of nearly 15 tonnes on Monday, taking holdings to their highest since 2014.